Performance, Commentary & Portfolio
ISIN GB00BNG2M159 | SEDOL BNG2M15
Fund Manager’s Review
Allianz Technology Trust’s Net Asset Value (NAV) total return was 5.81% in January, compared to the Dow Jones World Technology Index return of 1.50% both in GBP
While the overall technology sector was higher for the month, there was a sharp reversal in select industries, namely hardware and semiconductor shares, after Chinese Artificial Intelligence software start-up DeepSeek announced it had developed a chatbot with the same functionality as Open AI’s ChatGPT - but at a fraction of the cost. The news added to the uncertainty caused by Donald Trump’s return to the White House, with the president swiftly signing a raft of executive orders to progress his agenda.
Monthly performance results meaningfully outpaced the benchmark thanks to bottom-up stock selection and allocation impacts. Relative performance was led by outsized gains and above-benchmark exposure within software, IT services and entertainment industries, while our modest cash position was only a slight drag on performance for the month.
Contributors
Our top relative performer was Cloudflare Inc., a global content delivery network provider, which rallied amid expectations of favorable earnings results combined with the DeepSeek news which stands to benefit demand for cybersecurity and observability (understanding the internal state of a system based on its outputs) solutions, translating to more bullish sell-side expectations.
Our structural below-benchmark allocation, given our max position size limitations, to graphics processing and related networking leader NVIDIA Corp. aided results again this month due in part to concerns about reduced demand for high-end graphics processing units (GPUs) in light of the DeepSeek news.
Similarly, a structural below-benchmark position in iPhone and personal computer maker Apple Inc. contributed to relative results amid a broadening of overall market performance and recent headwinds in technology hardware stocks.
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we remain actively positioned within software and IT services, two areas which are seen as beneficiaries of potentially cheaper AI-related solutions and offer secular growth potential |
Our active positions in Spotify Technology S.A., a provider of commercial free music and audio streaming solutions, and Atlassian Corp., a provider of enterprise project management software, also contributed to relative performance given their double-digit gains in January.
Detractors
Our active underweight to search engine, infrastructure and data analytics application leader Alphabet Inc. detracted from relative performance for the month as shares continued to notch higher amid a more favourable regulatory outlook, combined with the stock’s attractive growth versus valuation mix relative to other mega-cap companies.
Our avoidance of legacy IT services provider International Business Machines Corp. offset returns given their moderate weights in the broadbased index combined with positive stock performance as investors incrementally gravitated toward such value stocks during the month.
Our active position in ServiceNow, Inc., a provider of enterprise information technology management software, detracted following quarterly results which highlighted a narrower-than-expected earnings beat, despite underlying demand trends and execution appearing to be solid.
Additionally, our avoidance of chipmaker Qualcomm Inc. and semiconductor manufacturing equipment maker ASML Holding N.V. offset relative performance as the stocks were beneficiaries of the rotation out of high-performance data center and artificial intelligence (AI) related chips into more traditional semiconductor applications.
New buys and sells
Turnover in January was undertaken at higher-than-normal level, reflective of market news and our efforts to adjust the portfolio based upon near-term risk versus reward. We newly purchased shares of customer relationship management software leader Salesforce, Inc. thanks in part to the company’s exposure to agentic AI, a technology that powers AI agents to act autonomously to facilitate seamless interaction between AI agents and humans. We bought shares of security provider Rubrik, Inc. given the company’s attractive growth runway as one of the few data storage companies with a formidable security offering. We also purchased Okta, Inc. a leading independent identity management platform, amid greater near-term execution and increased conviction that the company can execute its strategy. These new buys were funded in part via the exit of Cadence Design Systems Inc., a provider of automation software, amid concerns of China risk restructuring which may translate to a less attractive risk versus reward. We also fully exited our position in enterprise software leader Oracle Corp. due to expectations that their AI as a service offering will pressure overall margins and to lock in gains from recent months. Lastly, we sold enterprise applications and business AI-related software maker SAP SE in an effort to take advantage of the strong gains and reposition the proceeds into other higher growth opportunities.
Outlook
We continue to be highly constructive on the technology landscape as the asset class fundamental factors remain healthy and earnings growth estimates relative to valuation appear to be reasonable. The DeepSeek news translated to higher volatility for select segments within technology and we remain actively positioned within software and IT services, two areas which are seen as beneficiaries of potentially cheaper AI-related solutions and offer secular growth potential. Investors continue to pay close attention to interest rate levels, with future cuts forecasted, which are likely to have an incremental benefit to technology shares. Our expectation is that merger and acquisition activity may continue to rise as capital markets continue to show signs of strength. Amid the volatility, we are opportunistically looking to upgrade select names and add to our highest conviction ideas to better position the portfolio for improved performance.
Our focus remains on building the portfolio from a bottom-up perspective with a macro-overview. Technology remains a key enabler across almost every industry and we will continue to seek stocks which solve difficult problems and can be long-term outperformers. Despite short-term periods of higher volatility, earnings growth ultimately drives stock prices over the long term, and in our view, we are still early in the spending trend supporting this dynamic segment.
Mike Seidenberg
14 February 2025
This is no recommendation or solicitation to buy or sell any particular security. Any security mentioned above will not necessarily be comprised in the portfolio by the time this document is disclosed or at any other subsequent date.
1.Calculated as 10% of outperformance against the benchmark, after adjusting for changes in share capital and will be capped at 1.75% of the Company’s average daily NAV over the relevant year.
2. As at the Trust’s Financial Year End (31.12.2023). Ongoing Charges (previously Total Expense Ratios) are published annually to show operational expenses, which include the annual management fee, incurred in the running of the company but excluding financing costs.
Registrations |
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Company No. |
03117355 |
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FATCA GIIN No. |
YSYR74.99999.SL.826 |
Codes |
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RIC |
ATT.L |
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SEDOL |
BNG2M15 |
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ISIN |
GB00BNG2M159 |
Awards & Ratings
Investment Week Investment Company of the Year Award 2021 – Specialist category
Allianz Technology Trust won this coveted award in November 2021, having also been a winner in similar categories in 2020, 2019, 2018, 2017 and 2015. This award recognises excellence in closed-ended fund management and highlights ATT’s consistent performance over time. The judging panel was made up of some of the UK’s leading researchers and investors in investment trusts and closed-ended companies, as well as several senior board members with many years’ experience in the industry.
Association of Investment Companies Shareholder Communication Awards 2021
Allianz Technology Trust won the Best Large Trust category, in recognition of its consistent, high achievement. The publication noted that ATT achieved the highest returns among this year’s award-winners (performance measured over three years to 31 January 2020), calling it “a worthy winner of our most prestigious sector award”. This accolade is an independent, statistical and qualitative assessment of ATT’s performance and highlights the Trust’s outperformance both in its class and against its peers.
Shares Awards 2020 – Best Investment Trust
Allianz Technology Trust was pleased to win ‘Best Investment Trust’ in The Shares Awards 2020. The awards were voted by readers of Shares and by the general public, making the award truly representative of the people who invest in the Trust and its peers. In presenting the award, Shares Magazine noted: “The technology sector had been in the ascendancy even before the events of 2020 but the global pandemic has super-charged this trend. We have been even more reliant on tech to tackle the day-to basics of work and home life. Staying in touch through video conferencing, ordering goods and food online and streaming entertainment to keep us entertained at home. Allianz Technology Trust is plugged into these themes and was voted Best Investment Trust in this year’s Shares Awards.”.
Kepler Growth Rating
Kepler Ratings are designed with investment trusts specifically in mind and aim to highlight those which they consider to be ‘best in class’ based on a clear, easy to understand set of quantitative tests. The selection system is entirely quantitative, setting aside all personal biases and views, looking at the universe in a purely objective way.
Morningstar Rating Allianz Technology Trust has a 5 star rating with Morningstar. This is a risk-adjusted, cost-adjusted comparison of fund performance within fund categories. The underlying methodology is robust and accounts for periods of volatility-downward volatility in particular-and also adjusts for fund expenses, including sales charges. That means the more expensive the fund is, the harder it will be for the fund to earn a high star rating.
A ranking, a rating or an award provides no indicator of future performance and is not constant over time.
Morningstar star rating © 2021 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.